We will see an increase in the state budget deficit in 2020.
Jakarta (ANTARA) - Indonesia's state budget deficit is expected to reach a range of 2.2 to 2.5 percent of the Gross Domestic Product (GDP) as an impact of the coronavirus (COVID-19) outbreak that has hindered global economic activities, Finance Minister Sri Mulyani Indrawati said.

The coronavirus outbreak has suppressed the projection of revenue in the state budget due to the disruption in supply and demand in the global supply chain, Indrawati said at the Presidential Palace here on Monday.

The sluggish demand has undermined the prices of commodities, including Indonesia's export commodities.

This has implicated the state revenue, for instance, from the oil and gas sector. The revenue from taxes in some sectors was also affected by the change in the business performance due to COVID-19.

"Therefore, we will see an increase in the state budget deficit in 2020. Now, we have an indication of deficit at a range of 2.2-2.5 percent. But we will see further the revenue and expenditure," she said.

The government previously targeted a deficit of 1.76 percent of GDP or some Rp307.2 trillion in the state budget 2020. The assumption was based on state expenditure set at Rp2,540.4 trillion and revenue at Rp2,233.2 trillion.

The minister said, amidst the stagnating revenue, the government has tried to optimize expenditure to increase fiscal contribution to the economy, as it would need stimulus from fiscal instruments to minimize the impact of global economic pressures.

"In 2020, we will continue to use our fiscal instrument. The situation is very dynamic, but we would try to formulate a fiscal policy to minimize the negative impact of the COVID-19," Indrawati remarked, adding that she has worked closely with the Coordinating Minister for Economic Affairs, Airlangga Hartarto, to prepare a fiscal policy to anticipate global uncertainty in the first quarter of 2020.

In addition to the coronavirus, world oil price fluctuations have posed a challenge for the government, as declining oil prices will bring about a direct impact to the state revenue from the energy sector, she said.

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Translator: Indra Arief P, Sri Haryati
Editor: Rahmad Nasution
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